Crude oil markets early gains on Tuesday were reversed in a volatile session

Near curve contracts on the NBP settled lower for a third straight day

Near curve contracts on the NBP settled lower for a third straight day on Tuesday while futures from the winter out closed a touch higher.  The May contract eased by 1.82p yesterday bringing the decline for the last three days to 57.08p.  The markets are still on edge on possibility of cuts in Russian gas supplies, but the UK is expecting a further 10 LNG tankers by the end of next week.  Yesterday LNG supplies made up 37.8% of UK gas demand. Prompt prices reacted to news of an outage at the Sleipner field which curbed UK natural gas imports by around 5MCM.  The spot gained 9.00p to settle at 233.05p while the day ahead product closed at 231.05p.

 Carbon EUAs eased on the day

Baseload for the day ahead shed a further 14.0% on Tuesday, closing at £179.70/MWh as wind generation if forecast to remain above average today.  A return to more normal temperatures is also expected to reduce demand and should see supply margins widen for the rest of the week. GB baseload futures echoed movements on the NBP curve as near contract settled an average of £2.00/MWh lower while contracts from the winter out closed around £3.90/MWh higher.  Carbon EUAs eased on the day with the spot closing at €78.11, down 49 cent per tonne.

The dollar climbed to the highest level in almost two years

Tuesdays early gains in the crude oil markets were reversed in a volatile session as a stronger dollar and growing demand concerns in China vied with supply fears as the West prepares a tougher package of sanctions for Russia.  The dollar climbed to the highest level in almost two years yesterday after the U.S. Fed hinted at tightening monetary policy to curb inflation. A stronger dollar pressures commodities traded in dollars as it makes them more expensive to other currencies.  The demand side were given a further blow with news that China is to extend a lockdown in Shanghai to the financial center despite a lower number of new cases on Tuesday.  At the close Brent settled 89 cents a barrel down at $106.64 a barrel.

 The June contract for Brent is over a dollar higher this morning

The May contract on the NBP curve opened at 213.30p but latest trades have seen the front month trade just above last nights close at 243.15p. The near months have traded back and forth in early exchanges as the market seems unsure of direction.  Prompt prices are also trading higher although activity is thin.  The GB gas demand is forecast at 282MCM for today and supplies are lagging slightly.  In the crude oil markets, the June contract for Brent is over a dollar higher this morning as the threat of tougher sanctions on Russia looms.

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